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Monday, June 15, 2020

Legislative Session Recap

Heading into the 2020 legislative session, we said policymakers had the opportunity to speed up scheduled tax cuts, make it easier to enter new careers, guarantee support is given to those who are genuinely in need, and increase the fiscal accountability of local governments.

ITR supported legislation that would allow Iowans to keep more of their hard-earned money and increase the freedom to make decisions without the government creating unnecessary barriers.

Now that the legislative session is over, what did lawmakers accomplish?
 

Legislative Success

Two bills that ITR supported were passed by both the Iowa House and Senate and will now be sent to the Governor for her signature.
Remove Excessive Licensing Regulations- HF 2627

Excessive occupational licensing regulations create barriers for individuals entering the workforce and increases costs for businesses and consumers. This important reform:
  • Implements universal recognition, allowing new Iowa residents with an out-of-state license to use their skills and training in the same licensed profession here in Iowa without additional red tape
  • Waives initial licensing fees for first-time applicants of families earning less than 200 percent of the federal poverty level
  • Applies common-sense criminal justice reforms to the licensure process for those with a conviction history
  • Adds provisions related to the COVID-19 pandemic and the Governor’s proclamations during the public health emergency allowing continuing education requirements to be fulfilled online
Governor Reynolds included this bill as one of several key pieces of legislation that "will help ensure every Iowan, regardless of their background or circumstance, has an opportunity to succeed."

Senate Majority Leader Jack Whitver believes the reforms will "bring more people who are able to work into the workforce...lowering barriers to work in some professions."

Passing occupational licensing reforms will in fact make it easier for Iowans to work and pursue career opportunities, especially as we move forward from the economic havoc caused by COVID-19.

We all know heavy regulations serve as a red tape tax that impacts Iowa’s working class. Occupational licensing laws make it more difficult and more expensive for Iowans to earn a living and fill high-demand jobs. The changes passed by the legislature in House File 2627 put Iowans ahead of the special interests.  
COVID Liability Protection - SF 2338

This legislation protects Iowa businesses and health care providers from many coronavirus-related lawsuits if they are acting responsibly and with caution. 

House Speaker Pat Grassley explained, "These Iowans should be protected for their heroism, selflessness, and for doing the right thing during an unprecedented and rapidly evolving situation. That’s what our COVID liability legislation is about. But if there were businesses who failed to keep their workers safe, they can and should be held accountable for their actions. Our legislation ensures that."

Sen. Zach Whiting, the bill's floor manager said, "If you're an employer or a premises operator or health care professional, and you did your best to keep your people and your property safe based on the public health guidance and best practices at the time, you're OK, and you should not have the threat of litigation hanging over your head."
Senate President Charles Schneider provided a nice summary of the legislative accomplishments for the last few years:

"Since January 2017, the Legislature passed the largest income tax cuts in state history, making Iowa a more competitive place to attract jobs and people. We reformed the opaque and punitive property tax system by giving property taxpayers more say on how local governments set their tax rates. We put hardworking Iowans, instead of the union bosses, in charge of the state, local governments, and school districts. We cut unnecessary rules and regulations that hindered economic growth and job creation. We protected doctors and business owners from frivolous lawsuits. We held the state budget in check. We even created the blackout license plate, the most popular specialty license place in state history! I couldn’t be prouder of our record. I believe these reforms make Iowa a more free, fair, and prosperous place to live."
 

Work Left to Do for Some Issues

Income tax reform was a topic of much discussion, but major changes did not come to fruition. Governor Reynolds and Senator Jake Chapman should be given credit for introducing bills that would have re-shaped tax policy in Iowa and ensured a reduction in our income tax rates.
SSB 3116/HSB 657  - First, Governor Reynolds's comprehensive Invest in Iowa Act would have reduced income taxes, reduced property taxes, increased the sales tax, shifted mental health funding away from property taxes, and funded the Natural Resources and Outdoor Recreation Trust Fund. After the coronavirus paused the legislative session, Reynolds said, "It is now on the back burner, but it will be back in the future.

ITR offered strong support for Governor Reynolds’s Invest in Iowa Act. A good summary of that support can be found in this piece published in the Sioux City Journal.


SSB 3202 - The second bill attempting to bring about major income tax reform was introduced during the final week of the session by Senate Ways and Means Chair Jake Chapman. It would have eliminated economic triggers from 2018's tax reform and simply instituted the promised lower rates on January 1, 2023 without additional revenue hurdles. The bill passed out of subcommittee, but it did not advance further.

Chapman said, "That is taxpayer money. More now than ever, we need predictability in our tax climate, we need to incentivize, not penalize, Iowans. This is the time to really get our economy back on solid ground. These are measures that I believe provide the stability we need to get that engine rolling again."

Why is it so important to bring income tax rates down?

As ITR President Chris Ingstad testified in support of Senator Chapman’s bill, "Iowa’s income tax rates are still high in comparison to the rest of the country, and certainly within the Midwest. Of our neighboring states, only Minnesota has higher rates than Iowa. Lower-income tax rates, and increased certainty within the code, will make Iowa more attractive to people and businesses looking to move to our state. Reducing rates will also help encourage existing Iowans to stay here."

Other legislation not advancing this year:

The bills listed below were introduced, some were approved by a subcommittee or committee, and two were passed by one chamber but not the other:

SF 2272 - Stopping Public Assistance Fraud (Passed Senate)
HF 2030 - Stopping Public Assistance Fraud

HF 2424 - Eliminating the Welfare Cliff (Passed House)

SF 2395 - Taxpayer-funded lobbyist transparency

SF 307 - Complete repeal of the state inheritance tax

SF 2116 - Comprehensive review of all fees

HSB 503 - Excluding charges for legal services from fees to examine or copy public records.

HF 2060 - Limits the date of certain school bond elections to the regular school election date

SJR 20 - Spending limitation amendment

SJR 22 - Income tax supermajority amendment

HF 2368 - Remove two existing state regulations when a new regulation is added to the Iowa administrative code

What do you think?

Use our simple email form to quickly let the Governor and your legislators know you appreciate their effort or are disappointed with the lack of progress on an issue:
 
Click to Email the Governor and Your Legislators

What did they do with your tax dollars?

All the pieces have fallen into place, and legislators have finalized the state's $7.78 billion budget set to take effect July 1. The budget surplus for Fiscal Year 2020 helped reduce the impact of COVID-19 on Fiscal Year 2021's projected revenue. This has led to a budget that is $26.6 million more than last year.

Rep. Gary Mohr, Chairman of the House Appropriations Committee, said, 'We expect to take in enough revenue to maintain the status quo and maintain our commitments to our schools and our health care system."

While most state agencies and departments will work with the same level of funding, a few will see changes.

Budget items receiving more funding:
  • $100 million more for K-12 Education
  • $32 million more for Medicaid
  • $16.5 million more for HAWK-I children's health insurance

Three areas will see a reduction in funding:
  • $8 million less for the Iowa Board of Regents
  • $500,000 less for the Judicial Branch
  • $250,000 less for the Iowa Secretary of State
Senate Appropriations Chairman Michael Breitbach said the state will have a $311 million cushion if revenue does not meet expectations before it would have to dip into cash reserves or the Taxpayer Trust Fund.

Breitbach added that some of budget areas not receiving an increase in funding could possibly get some supplemental money if the economy rebounds.

ITR's Take

It is difficult to accurately estimate revenue in "normal" years. Just two years ago, mid-year budget cuts were needed because state revenue increased, but not as fast as anticipated.

For this reason, it was smart for legislators to not spend the maximum amount available to them.

State law allows spending up to 99 percent of estimated revenue, including any surplus carried over from the prior fiscal year. Iowa’s 2021 budget spends 96.7 percent of estimated revenue (based on update projections set forth last month) and does not use any money from Iowa's reserve funds. Now the only question remains, will those update revenue projections hold-up, or will the economic impact of COVID-19 go deeper?

Regardless of what the future revenues of the state looks like, it is always wise to follow one of the budgeting principles of Thomas Jefferson. In a letter to his granddaughter, Jefferson shared his twelve canons of conduct including, "Never spend money before you have it."

That is a good principle for individuals as well as any level of government to keep in mind when budgeting. Speaker Grassley offered these comments on the budget at the end of the session, stating that the legislature has:

…enacted a cautious and conservative state budget that invests in priorities while respecting the hard-working taxpayers. While the COVID pandemic has strained other state budgets, resulting in cuts to key programs like K-12 education, health care, and worker training … Iowa is in good shape because of the forward-looking action we have taken in the past and we will continue to be in a strong position moving forward.

Links of Interest

Iowa leaders call for end to $600-a-week federal unemployment supplement - Des Moines Register
79% of Iowans on unemployment since April have received more money each week than they did at their former jobs.  "That doesn't seem like a recipe for economic growth," said U.S. Senator Chuck Grassley
Federal debt tops $26 trillion for first time; jumps $2 trillion in just 63 days
- CNS News

Federal spending and deficit set records through may
- CNS News

Coronavirus likely to delay Iowa legislative redistricting
- Cedar Rapids Gazette

COVID-19 creates economic uncertainty
- Des Moines Register

Ethanol industry faces unparalleled crises
- Des Moines Register

At a time of uncertainty and instability, school choice policies are key
- Iowa Field Report

In Case You Missed It

Back under the dome

Lawmakers return to the Capitol
Reynolds is delivering transparency
Somebody's going to pay the bill
Roadmap to recovery

Freeze government salaries, Don't increase taxes,
Remove excessive licensing regulations, 
Increase government transparency,
COVID liability protection, and Eliminate the welfare cliff effect
Iowa's digital divide - rural internet

Policies to connect more Iowans to broadband
Use taxpayer dollars wisely
Nancy Pelosi pushing more spending

Show Me Reform
Legislature to Reconvene June 3rd
Keeping an Eye on Georgia
Iowa's economy has shrunk $1.6 billion

Disappearing Income, Jobs, and Gov't Tax Revenue
We Don't CARE for Needless Spending
Are federal COVID-19 economic impact payments taxable in Iowa?

Complete 2020 ITR Watchdog Newsletter Archive
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Copyright © 2020 Iowans for Tax Relief, All rights reserved.


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